Mastek Ltd - Company Update - ICICI Securities

Mastek's revenues increased 38.2% QoQ to Rs. 336.7 crore, mainly led by Evosys acquisition (Rs. 87 crore in the quarter) and 2.5% QoQ organic revenues. EBITDA margins increased 350 bps QoQ to 17.3%, mainly led by higher margins at Evosys and improvement in organic revenues. Reported PAT margins improved 70 bps to 11%. The company has seen healthy growth in its order book, which increased 66.7% QoQ to Rs. 785.1 crore and 57.2% QoQ in dollar terms.

Valuation & Outlook

In the near term, we expect revenues to be impacted by Covid-19 pandemic impacting UK private sector and US retail revenues. However, we expect revenues in the UK government to improve from H2FY21E led by strong deal pipeline. In addition, vendor consolidation in US retail coupled with acquisition of Evosys will drive FY21E revenues. Further, cost rationalisation and higher margins at Evosys is expected to gradually drive margins upwards. Hence, we upgrade the stock from REDUCE to HOLD with a revised target price of Rs. 370/share.

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_Mastek_CoUpdate_Jun20.pdf

Shares of MASTEK LTD. was last trading in BSE at Rs.346 as compared to the previous close of Rs. 288.35. The total number of shares traded during the day was 25260 in over 1087 trades.

The stock hit an intraday high of Rs. 346 and intraday low of 305.7. The net turnover during the day was Rs. 8325815.

Source : Equity Bulls

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